01 Feb 2018

Investors seek more insight into boardrooms: survey

Activist Insight

Morrow Sodali Institutional Investor Survey 2018 suggests investors are lusting for more insight into how boardrooms are operating, raising the demands on directors.

On activist campaigns, the survey suggested investors would prioritize activists with the ability to tell “a credible story focusing on long-term strategy,” mirroring their demands on companies. A target’s capital allocation approach ranked as the second highest priority in activist situations, ahead of a weak board and poor engagement practices.

“The survey is actually good news for companies,” Morrow Sodali Chairman John Wilcox said in an interview with Activist Insight. “It reinforces the willingness of investors to listen to individual stories at individual companies, as opposed to a box-ticking ap proach at annual meetings.”

Issuers with a good case to make in the face of an activist challenge could still win support in 2018 without a favorable proxy voting adviser recommendation, Wilcox argued.
Wilcox said the results did not point to a desire to micro-manage companies, drawing a comparison between the appetite for greater disclosure and the introduction of “say on pay” votes almost a decade ago. Investors “want to know more about how the board is doing its job in order to be sure the board is doing its job well,” he said.

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Topics

Directors ESG Governance Remuneration Shareholder Activism Shareholder Communication Shareholder Engagement Global